The Broadbent Blog

Hugh Segal: Reflections on "Towards Equality"

When Red Tories hear that union leaders, trade union economists, academics and thoughtful politicians of the left (and Red Tories believe there are many) are planning to engage and advocate on the issue of inequality, we have cause to worry a little. We worry because their focus is often on legislating outcomes that must be glaringly and unabashedly equal. We also worry about polemicists on the far right who argue that most unequal outcomes happen because the winners worked harder, took more risks, had more skill and well, that's how freedom and free markets are supposed to work, even though many of the winners were winners because their parents were or because they were at the right place at the right time. Both biases are deeply unhelpful to finding genuine solutions to inequality.

Focusing on unequal outcomes or the so called "deserving winners" is like assessing peewee hockey's impact on young girls and boys by the final score of the last game of the NHL play offs. Where the action is and where federal, provincial and municipal policy can make a difference is around equality of opportunity, not equality of outcomes. Governments that try to legislate outcomes not only over-reach but bring public policy, left, right or centre, into disrepute. The right brings disrepute upon itself by suggesting that the poor do not work hard; the left by attacking those in business and the professions who do exceptionally well.

Where courage and engagement by both the public and private sector is required, and sorely lacking, is at the level of equality of opportunity. And here, governments of the left, centre and right over the last four decades, both federally and provincially, have been mediocre, risk-averse, naïve and held captive by the narrow and unconscionable biases of the right and left wing cant.

On this issue, with some notable exceptions, the media has simply dropped in from time to time but has never given it the notoriety of say, a $16 glass of orange juice. The 1990s Child Tax Credit, for which the Caledon Institute deserves at least as much, if not more, credit than the federal and provincial ministers who agreed to it, and which was a good but modest step ahead, was too little to make a serious difference in the reality faced by poor families and individuals in Canada.

There has been, since the federal-provincial MINCOME experiment in Dauphin Manitoba in the mid 1970's, and the Bill Davis Guaranteed Annual Income Supplement for seniors in Ontario at about the same time, very little courage or innovation on any structural narrowing of the gap between the poor and the economic mainstream anywhere in Canada.

Here are some examples of what mediocrity, half-heartedness and ideological blinkers look like as they block the road to genuine progress on equality of opportunity:

Example 1:

Social democratic Quebec Sovereigntists brought in a Guaranteed Basic Income law in their last administration under Premiers Bouchard and Landry but never funded it. No one, left, right or centre has tried anything else. Danny Williams, the previous Progressive Conservative Premier of Newfoundland and Labrador, did raise individual welfare recipients' monthly base income to just above the poverty line (to his ever-lasting credit) but since then, nothing similar has occurred elsewhere. Most Canadians neither know, nor appear to care, that all welfare payments made still leave recipients beneath the poverty line. Jim Flaherty's well-meaning Working Income Tax Benefit, introduced in his first budget, is a well-intentioned support for the working poor, allowing them to keep more of what they earn. But it is neither broad nor generous enough, however well-intentioned, and did little to reduce the percentage of Canadians who live beneath the poverty line. At least he understood that poverty and low-income work can be mutually reinforcing and paralytic.

Example 2:

My friends on the right often equate being poor with not being employed, hence justifying no further support for those who do not work. 'There's no such thing as a bad job' or, 'Thou shalt not encourage sloth.' seem, on the surface, to be not entirely unreasonable arguments, either on the right or the left. Except that the vast majority of people living beneath the poverty line are indeed working! Many are holding down more than one low paying job which, because they are low paying with no prospects, benefits or training, are indeed bad jobs. Nobody would deny the intrinsic dignity of work. But ignoring the intrinsic futility of poverty and its massive costs to poor families and neighbourhoods and our entire society is a victory for naivety over reason. Believing that a society can achieve high levels of personal freedom, social stability and both individual and collective achievement when gaps between wealthy and poor expand is to deny the realities faced by poor families and communities in Canada.

And the pathologies that poverty cause – poor health, family break-up, increased high school dropout rates, undue involvement with the police and the courts, higher levels of substance abuse - predestine young people to have very unequal opportunity, less education, insecure low-paying jobs, and no chance to turn hard work into social and economic progress for them or society. So the right should stop with the “justifiable outcomes theology” and focus on where genuine inequality of opportunity dilutes our social and economic strength as a country and society. The left should stop with the "spending more money and hiring more public servants" programme answer to this and every other social challenge.

Example 3:

My friends on the left usually confuse protecting good unionized public sector jobs with actually resolving glaring inequality of opportunity. Any notion of an automated, automatic, basic income top up, driven by annual tax filings as opposed to case work-driven "income support", "welfare" or "Ontario Works" officers, violates the first commandment on the left – protect every unionized job at any cost.Even if that cost is a continuing failure of a micro-managing, soul-destroying welfare system that traps people in poverty, forces mothers to negotiate through plexiglass for enough to feed their children and makes first-time applicants at some welfare offices watch a video on why they may not wish to apply after all.

In 2009, when appearing before a Senate sub-committee on urban poverty, the-then Ontario Minister responsible for poverty abatement Deb Matthews, testified as to the current 800 rules in the manual of administration for Ontario Works (welfare) Officers. That is a tough burden to carry and decipher for even the most determined, card-carrying (unionized), fairly paid and compassionate public servant in the welfare system with their larger than manageable case loads.

We can enumerate causes of inequality, parse complex social programmes, their purposes, design and implementation, hoping that a thousand tiny changes in a hundred different programmes at three levels of government may help a little. Or, we can get serious about the reduction of poverty by addressing the core reality of poverty. And that reality is money.

Ten percent of Canadians do not have enough money every month to pay for shelter, food, clothes, transportation – the very basics for themselves and their families. That percentage is far higher in rural Canada and among our First Nations. New, legal and industrious immigrants and young people are disproportionately represented amongst our nation’s poor. And the vast majority of poor Canadians are actually working Canadians. The laziness in the poverty world is found among the civil servants, academics and policy analysts who refuse to cost out and test what an automatic income top-up or basic income floor would look like.

A very engaged and valuable academic by the name of Dr. Evelyn Forget has not been lazy. She has looked and is looking deeply into what actually happened in Dauphin Manitoba’s MINCOME experiment with a minimum income guarantee in the mid-1970s under Premier Schreyer and Prime Minister Trudeau. Her research, funded in part by the Canadian Institutes of Health Research, underlined how cost-efficient MINCOME was and how the automatic income guarantee in that small community reduced, in measurable ways, the negative "social determinants of health".

Only 17 percent of residents needed a top up of any kind. The benefits however, were experienced by the entire population. She has found that, in the period that MINCOME was administered, hospital visits including work-related injuries, domestic abuse and mental health visits dropped by more than 8 percent. By her calculations, an 8.5 percent drop in hospital visits in today’s standards would save taxpayers 4 billion dollars annually. And along with the positive health results, Dr. Forget found that teenagers stayed in school longer and the education enrolment in Dauphin surged. Teens no longer needed to drop out of school in order to help contribute to the family finances.

Inequality and poverty are about the money. Poverty always has been and always will be. All the negative pathologies, including family violence and breakup, school drop outs, criminal activity, poor health, substance abuse, and shorter life spans are made better when less people live beneath the poverty line. We can have academic conferences, papers and seminars about all the many determinants of poverty, some that are, but more that are not, within the purview of any government, left, right or center, to fix. Or we can confront poverty as a cause – not as a result. In some measure we have done this for seniors, reducing poverty levels from thirty percent to under five percent when the Guaranteed Annual Income Supplement as an automatic top up based on tax filings began in Ontario and migrated across Canada. We must now do the same for all those who live beneath the poverty line.

"Inequality" has been an invitation for endless policy elaboration around instruments that will be, at best, peripheral. It should be an invitation to deal with poverty head on once and for all. For the left, it would make equality of opportunity real and an integrated part of coherent tax-driven, poverty eradication policy. For the right it would be an efficient, non-bureaucratic economic victory that promotes economic stability and enhanced productivity.

Raising taxes on the wealthy, a ‘one solution fits all’ choice for some on the left will produce an endless dialectic about who is wealthy and what is “excessive income”. The issue for a Red Tory is not how best to raise taxes. The issue is how best and most effectively to eradicate poverty – the worst part of inequality and the most devastating scourge on a fair-minded and economically productive society. The public and private sectors can work together here, including trade unions, small and large business.

The challenge is not one of creating multiple new designs for a plethora of new programmes or confiscatory taxes.

The challenge is simple: shaping a basic income floor, accessed by simply filing one’s tax return. Welfare as we know it would be obviated, liberating hundreds of millions of dollars for provinces to invest in education, healthcare and reduced deficits. Moderating taxes on middle income Canadians and small business would be possible. The burdens on Employment Insurance, many of which are about income security and not employment insurance, could be better managed and reduced.

Institutional paralysis in the civil service and excess prejudice on the right and left have kept Canada from embracing this challenge. The time to engage is here and now.

Senator Hugh Segal, a former Vice-Chair of the Senate Subcommittee on Urban Poverty, has promoted a guaranteed annual income since 1969.